After posting record profits in 2003, the Canadian oil and gas industry will experience yet another profitable year in 2004, according to the Conference Board of Canada’s newest industrial outlook report. The economic forecast service provided the energy outlook on Wednesday.

“Following a record year in 2003, profits in the oil and gas industry will remain high by historical standards, coming in at C$13 billion this year because of high energy prices and strong production,” said Louis Thériault, associate director of Canadian Industrial Outlook, which is responsible for the forecast service. “The natural gas and the non-conventional crude oil sectors will be responsible for the expected solid performance of the industry over the medium term.”

The report noted that oil and gas profits in 1Q2003 “soared to their highest level” in Canada’s history, and helped propel annual profits to an estimated C$28.7 billion. Profits are expected to decline to C$13 billion in 2004, “but will remain high by historical standards.” Over the medium term, the report noted that profits also will remain strong, but will fall off from 2003 and 2004 levels. The industry is broken down into five sectors in the report: light crude, light offshore crude, heavy crude, non-conventional crude and natural gas.

“Surging prices in the first half of 2003 should result in revenue gains of close to 24% — including a 78% gain in natural gas. Revenues will decline by 5.1% in 2004 because of declining natural gas production and a drop in crude prices, but will remain high by historical standards,” the report noted. The forecast also reported that costs in the oil and gas sector increased by 1.7% in 2003, and “are forecast to rise by 2.1% in 2004, including a sharp increase in capital costs.”

The Canadian Industrial Outlook Service provides detailed five-year forecasts of the economic conditions and profitability in 10 key industries, including aircraft, construction, telecommunications, automobiles, pulp and paper, tourism and food manufacturing. For more information, visit the web site at www.conferenceboard.ca.

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